The Department of Public Health has scheduled a May 13 hearing to review allegations that Recology subsidiary Sunset Scavenger overbilled for trash collection at a condominium building for years, resulting in $84,544 in excess charges, erroneously charged the building commercial rates, and is refusing to make a full refund. Recology counters that the building's managers oversubscribed, and the company gave a three-month refund as a show of good faith, but considers additional refunds punitive.

The hearing should interest the 21 percent of San Francisco residents who own units in condominium buildings. According to the Assessor-Recorder's Office, 42,478 of the city's 200,409 recorded parcels are now condominiums, with 3,192 registered as live/work, 38,300 as market rate, 980 as below-market rate, and 958 as commercial condo parcels as of fall 2010.

This struggle between ratepayers and Recology, which controls almost all aspects of the city's $275 million-a-year waste stream, seems emblematic of the problems that can arise when a monopoly is only partially regulated by local officials (the city does not have oversight of commercial collection rates) and then only in a labyrinthine process.

DPH's May 13 hearing comes three weeks after the Board's Budget and Finance Committee voted to wait until July before deciding whether to award the city's next landfill disposal contract to Recology. And it hits 18 months after the Department of the Environment, which derives half its budget from Recology's rates, first tentatively awarded the city's landfill contract to the San Francisco based garbage giant.

Since then critics have questioned how Recology got its monopoly, whether the arrangement benefits rate payers, and whether it makes environmental sense to haul the city's trash all the way to Yuba County, as Recology is proposing.

In February, the budget and legislative analyst recommended that the city replace existing trash collection and disposal laws with legislation that would require competitive bidding on all aspects of the city's waste collection, consolidation, and recycling system.

The analyst also recommended requiring that refuse collection rates for residential and commercial services be subject to board approval, noting that competitive bidding could result in reduced refuse collection rates (see "Garbage curveball," 02/8/11).

"The latest report says that the current system has been in existence since 1932 and let's put it out to competitive bid," said budget and legislative analyst Harvey Rose.

A 2002 report by Rose noted that the city has no regulatory authority over commercial refuse rates. "Instead, commercial rates are subject to agreements between the permitted and licensed refuse collectors and individual commercial producers of refuse, commercial tenants and building owners,)" the report stated.

Rose's report also found that commercial building owners often pay commercial refuse fees to Recology, so tenants don't know how much they are paying. "Normally, if tenants occupy such buildings for commercial purposes, the commercial refuse fees are passed on to the tenants as part of the overall rent and operating costs. As a result, it is likely that many commercial tenants do not know how much they are actually paying for commercial refuse collection," the report found.

It also noted that when the analysts attempted to complain about commercial refuse collection and commercial refuse rates ("for audit procedure purposes") and to inquire how to lodge a complaints with the city, there was "nobody to call."